Ciarán Lynch (Cork South Central, Labour)
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Question 87: To ask the Minister for Enterprise, Trade and Employment his views on reports of recent increases of up to 22% in a range of food prices and forecasts that food prices will rise further by the end of 2007; if he is satisfied that sufficient protection is available to protect consumers against unwarranted price increases; and if he will make a statement on the matter. [25386/07]

Micheál Martin (Cork South Central, Fianna Fail)
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I am aware of recent media reports of increases in certain food prices. However, the September 2007 Consumer Price Index as published by the Central Statistics Office shows that annual rate of food inflation is 2%. This compares with an overall rate of inflation of 4.6%.

Rising food prices are being experienced right across the world. Such increases are due to a number of different factors including climatic, economic and demand reasons. A recent report by the Organisation for Economic Cooperation and Development and the United Nations' Food and Agriculture Organisation has identified that the rapid expansion of the global bio fuel industry is causing fundamental changes to agricultural markets and is likely to keep the prices of agricultural commodities high over the next decade. The loss of potential food-producing land has in turn pushed up the cost of the animal feed used by dairy farmers. This has also coincided with surging demand for meat and dairy produce in India and China, as their economies and diets become more westernised. In Ireland, persistent rain this Summer has had a significant effect on crops such as cabbage, cauliflower and broccoli with up to 50% of some growers' yields being severely affected. Grain prices in Ireland continue to rise with the realisation that wheat harvests in most regions did not deliver as expected which in turn has increased the price of barley.

In so far as the price of food to Irish consumers is concerned, Government policy is focused on providing competitive markets which benefit consumers and the economy as a whole.

The Groceries Order was abolished in March 2006. This Order was in place for 18 years and had the effect of keeping the price of groceries artificially high. Whilst the market will take some time to adapt to the changed legislative environment, the removal of the order should stimulate competition, drive increased efficiencies at all levels of the distribution chain and produce a consequent downward pressure on retail prices from which consumers will ultimately benefit.

As regards the experience since the Order was abolished, the Consumer Price Index shows that the prices of products previously covered by the Groceries Order rose by 1.8% in the period from September 2006 to September 2007. During the same period however, prices of products not covered by the Groceries Order rose by 2.3%. The Consumer Price Index for September shows products previously covered by the Groceries Order (GO) are up 0.1% in the month and non Groceries Order items are up 0.4% in the month. It is clear, therefore that the abolition of the Groceries Order has had a significant moderating effect in terms of food inflation.

Following the abolition of the Order, the Minister asked the Competition Authority to review and monitor developments in the grocery sector in light of the new regulatory environment. Under Towards 2016, the Competition Authority has been asked to assess, over time, the impact of the new regulatory environment in the context of abuse of a dominant position including both excessive and predatory pricing. As part of this process the Authority has been asked to report to the Government periodically and to make any recommendations it considers appropriate having regard to its findings.

Work is continuing on the Grocery Monitor Project. Since April 2007 one year's worth of post Groceries Order data have been available for analysis. Later this year the Authority intends to publish an analysis of developments in the sector focusing on pricing trends, market structures and barriers to entry.